Cloudflare, Inc. (NET) shares plummeted 18.23% in post-market trading on Thursday. The sharp decline followed the company's earnings release and a significant corporate announcement.

The cybersecurity and internet infrastructure firm announced a plan to cut approximately 20% of its global workforce, amounting to over 1,100 jobs. Management stated the move is part of a strategic shift to an "agentic AI-first operating model," citing a more than 600% increase in employee AI tool usage last quarter. Despite reporting first-quarter revenue and adjusted earnings that exceeded analyst expectations, the company provided second-quarter revenue guidance that fell slightly short of estimates.

Investors reacted negatively to the scale of the restructuring, which is expected to incur charges between $140 million and $150 million, primarily in the current quarter. The combination of substantial near-term costs and a revenue outlook that failed to impress the market drove the severe sell-off in the stock.